(ABM FN-Dow Jones) European stock markets closed lower on Wednesday, after the United States and Iran clashed again and the tariff war of Trump seemed to enter a new chapter.
The Stoxx Europe 600 closed 0.7% lower at 621.19 points. The German DAX fell 1.3% to 24,795.94 points, and the French CAC 40 gave up 0.7% to 8,150.42 points. The FTSE 100 closed 0.4% lower in London at 10,332.30 points. In Milan, the FTSE MIB lost 1.1%.
The United States wants to impose import tariffs of at least 10% on most major trading partners, because they allegedly refuse to ban goods made with forced labor. Potential targets of the protectionist tariffs are China, the European Union, and Japan.
US President Donald Trump would thus want to restore his system of import tariffs, after the US Supreme Court put a stop to it in February.
An EU spokesperson called the reasoning "unfounded." "From the EU perspective, we are on track to realize our agreements on import tariffs by the end of June," the spokesperson said in a statement published by Reuters.
Oil prices rose by about 2%, with Brent crude trading at $98, after the US and Iran clashed again, shaking the ceasefire. The US on Tuesday evening hit an empty oil tanker that was allegedly trying to break the American blockade. Iran subsequently fired rockets and drones at Kuwait and Bahrain and at civilian targets in the Persian Gulf, and the US military attacked an Iranian military command center on Qeshm Island. According to the US, the ceasefire is still in effect.
"Pessimism on the market is again increasing about the prospects for a deal between the US and Iran that could pave the way for a reopening of the Strait of Hormuz," said Saxo Bank.
The OECD meanwhile reported that the global economy will slow sharply this year. Higher energy costs are undermining consumer spending and business investment.
In other macroeconomic news, the European services sector grew at a similar pace in May as in April. S&P economist Chris Williamson therefore thinks a contraction in the second quarter is "very likely," without a recovery in June.
Price pressure is increasing, Williamson warned, to "the most worrying level in more than three years." The economist fears that inflation will rise to around 4%. "And that will not please the ECB." But a rate hike during a recession is not without risk, the economist said.
Producer prices in the eurozone rose by 0.6% in April, much less than the 3.4% in March, Eurostat reported. Excluding energy, prices rose by 0.9% month-on-month.
In the United States, private sector employment grew more than expected in May, with 122,000 new jobs, compared to 105,000 in April. "We haven't seen that this strong in years," said ADP chief economist Nela Richardson, who saw "sustained momentum" in the labor market heading into the summer.
Additionally, the US services sector continued to grow, and factory orders rose by 4.8% in April, after a gain of 1.8% in March.
The euro/dollar fell to 1.1607.
Risers and fallers
Spanish Inditex rose 1.5% after results. That the company maintained its outlook should ease concerns about the impact of geopolitical unrest and economic headwinds, UBS analysts said.
In Frankfurt, utilities RWE and E.ON rose 3.7% and 1.7%. Heidelberg Materials and Deutsche Bank fell 3.4% and 3.7%. SAP and Scout24 fell 4.3% and 5.3%, respectively.
In London, B&M European Value Retail rose 14.6% after results. Asset manager ICG lost 4.6%, while advertising company WPP gave up 5.1%.
In Paris, Air Liquide rose 1.9%. Utilities Veolia and Engie gained 2.2% and 0.9%.
Automaker Stellantis lost 4.0%, Renault lost 2.7%, and luxury companies Kering and LVMH fell 4.1% and 3.0%.
In Amsterdam, Prosus and Adyen stood out with sharp declines of 4.4% and 4.7%. Prosus gave back Tuesday's gains. Payment company Adyen has been under pressure for several days.
Semiconductor names ASMI and ASML gained 1% to 2%. JPMorgan raised the price target for ASML from 1,515 to 1,900 euros and maintained a buy rating, after the entire sector was boosted by the AI boom.
Shell closed higher thanks to the oil price. AkzoNobel, on the other hand, plunged 17.5% after Nippon Paint and Sherwin Williams decided to abandon further attempts to take over AkzoNobel, after the company rejected two bids. AkzoNobel is betting on a merger with the American Axalta.
In Brussels, red dominated. Argenx closed slightly higher. Umicore lost 3.9%.
Wall Street close
Wall Street was lower at the close in Europe. The S&P500 index fell 0.6%.
